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Jax Tax, Tax Attorney

Category: Tax

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Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions

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My father passed away in Aug 2010

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My father passed away in Aug 2010, and my parents had a revocable trust INDIANA they wrote up in 1991. When either Trustee dies, the remaining Trustee would be the sole trustee of the trust. It was set up to be broken into a marital trust, and a residuary trust...and the money split would be the maximum marital exemption allowed. Well, Indiana is saying that since there was no ceiling on the exemption, then that means the trust would not now have a marital trust, and only a residual trust... It was set up to be 1M exemption for the marital, and the rest residuary which Mom had sole discression over the assets and what they could be used for, but the beneficiaries were the three children ..1.2M. We filed taxes EARLY Apr 11, and reported that half the Trust was Moms, and half Dads.... and that Mom was the sole trustee and in charge of all assets within the trust. We took a step up in basis on 1/2 the trusts assets, 1.1M, and the other 1.1M remains at the purchased price over the years in my mothers name... March 21st, 2012, we were informed that our inheritance tax form was NOT accepted, and that my Mom does NOT have ANY spousal exemption on the Trust. And that the entire 2.2M is taxable and we owe over 122K + 16K late fees since DOD over 500 days ago. This is just not right. We have 2 weeks to pay or its going downstate. I want to appeal this but getting feedback that I will lose and it will cost a bunch of money to me in the end... I just wants fair, and this is not. They are forcing us to pay inheritance taxes prematurely...... When my mother passes, we will be responsible for inheritance tax just like everyone else is when you live in Indiana. But denying my mother her right to a 100% spousal exemption in her golden years and being made to feel taken advantage of by a state she has lived in for 45+ years of her life is disheartening and cold. Please someone out there help me fight this ASAP! thank you Tom

Hi, I’m a moderator for this topic and I wonder whether you’re still waiting for an answer. If you are, please let me know and I will do my best to find an Expert to assist you right away. If not, feel free to let me know and I will cancel this question for you. Thank you!

Hi Rachel.... yes, I am still waiting for someone to give me some feedback.... We are under the gun with this, and I dont want to let the state of Indiana take away my mothers right to her husbands estate. It really makes me upset to think they can get away with it. I am going to try and fight it on my own, but hoping someone out there can give me a little feedback and guidence.... please see if you can dig up somebody with an opinion on my situation.... thank you... Tom

Please view my response on other question's. To summarize. A revocable trust is a poor vehicle for taxplanning as the value will be part of the grantor's taxable estate. Most all other info listed is not applicable. It really is a simple issue. You may want to look at a legal malpractice issue if the attorney that set it up did so for tax benefits because there are none.

Also, things like espousal claim and marital rights are inheritance issues that do not effect the taxable estate issue. I believe you are not getting responses because the question is a blend of unimportant information when it comes to the tax issue. Bottomline is that a revocable trust remains part of the donors taxable estate.

If you are not familiar with Indiana Inheritnace Tax then you would not understand the issue at hand. Not having a problem with estate taxes, but with Inheritance Tax. Thats what I am asking about... inheritance issues....

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. OrvilleHesperia, California

JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions

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